Societe Generale analyst: markets are 'giving Boeing the benefit of the doubt' over Dreamliner glitches

While unexplained fires on onboard Boeing's innovative 787 Dreamliner are a
serious concern, Zafar Khan says markets' reaction to the grounding of the
aircraft by most airlines has been "fairly muted."

The emergency landing of Japan’s All Nippon Airways (ANA) flight outside Tokyo on Wednesday was the sixth incident in the past 10 days to hit the 787 Dreamliner, which Boeing has spent billions of dollars on and touted as the future of air travel, due to its radical new design, systems and materials.

While fires onboard are a major concern, there are no signs of a crash in Boeing's share price, according to Zafar Khan, aerospace and defence anaylst at Societe Generale.

"Some of the issues reported I would put down to glitches which every new airliner will have.

"However the two fires I would regard as more serious, because if you have a fire in-flight then that can destroy other systems and that then becomes a really big issue.

"The market reaction has been fairly muted. We've had a couple of days when the stock was down 2-3%, it then recovered. It was down a couple of per cent yesterday. Interestingly it's little changed from where it was at the start of the year, so I think the market is really giving Boeing the benefit of the doubt at this stage," says Mr Khan.

ANA and Japan Airlines, the two carriers involved in all the incidents, have grounded their 24 Dreamliners.

A spokesman for the European Aviation Safety Agency said the region would follow the grounding order issued by the US Federal Aviation Administration yesterday. Poland's LOT Airlines LOT.UL is the only European airline currently operating the 787.